Former Apple general counsel settles with SEC on backdating

Apple's former general counsel Nancy Heinen has agreed to a settlement in SEC' …

The drawn-out process of dealing with the fallout of stock option accounting "irregularities" may finally come to a close. Former general counsel for Apple, Nancy Heinen, has agreed to pay $2.2 million to settle a lawsuit the SEC brought against Heinen last year.

In 2006, Apple had begun an investigation over problems in the accounting of certain stock option grants given to Apple executives, including herself, CEO Steve Jobs, CFO Fred Anderson, and others. At the conclusion of its internal investigation, Apple indicated that there were serious concerns about two former officers' actions regarding the backdating, but indicated Jobs was not at fault. The SEC continued to review this issue, and in April of last year filed lawsuits against Heinen and Anderson. Anderson settled right away, but laid the blame squarely at Jobs's feet. The SEC did not bring any charges against Apple or Jobs.

The SEC accused Heinen of causing Apple to fraudulently backdate two large stock grants in 2001, as well as covering up the fraud by forging documents related to the grant. Heinen originally contested the charges and, in her settlement, admitted to no wrongdoing. The $2.2 million includes money earned from the backdating, including interest, as well as a $200,000 punitive fine. Heinen also had to agree to not serve as an officer of a public company for five years and not to serve as attorney before the commission for three years.

Backdating is not illegal as long as it is properly disclosed and accounted for. But a rash of companies had been backdating option grants improperly around the turn of the millennium. "One thing important about this case was that it involved a general counsel who fabricated corporate documents to conceal the fraud," Robert Mitchell, an enforcement official in the SEC's San Francisco office, told Reuters. "That's the type of conduct the commission takes very seriously."

In her defense, Heinen didn't point the finger at Jobs, but took the high road in a prepared statement. "I cherish the great people I worked with at Apple, and I am proud of my contributions to its historic turnaround and current success," said Heinen. "With this lawsuit behind me, I look forward to addressing the greater challenges of social justice and economic disparity."